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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/Case Laws/2011-12/1272

Service provided by assessee but service tax paid by service recipient instead of by service provider – Demand of interest and imposition of penalty on service provider for violating Rules
Case: INVINCIBLE SECURITY v/s COMMISSIONER OF C. EX., NOIDA
 
Citation: 2011 (23) S.T.R. 19 (Tri.-Del.)
 
Issue:- Service provided by assessee but service tax paid by service recipient instead of by service provider – Demand of interest and imposition of penalty on service provider for violating Rules
 
Brief Facts:- Appellants were engaged in the business of providing security services which is covered under Service tax net and they are registered under Service Tax Department. They were engaged by M/s. Bharat Sanchar Nigam Ltd., Moradabad for providing security services vide an agreement. The terms and conditions were mutually agreed upon. The BSNL was reluctant to pay service tax on the invoices raised by appellants and instead BSNL started deducting the amount of service tax from the invoices raised by appellants. BSNL kept depositing the said amount of service tax in Punjab National Bank, Moradabad nominated for payment of service tax.
 
BSNL issued various certificates to the appellants evidencing the fact that service tax on the amount charged by appellant has been deducted and deposited with nominated bank for and on behalf of the appellant. Sample of such certificates were submitted. Copies of TR-6 challans evidencing deposit of service tax by BSNL were also provided to appellant.
 
Thereafter, the jurisdictional Superintendent raised demand of interest and penalty on late depositing of service tax vide a letter. In this letter, they admitted that service tax was paid. The interest had also been deposited vide a challan.
 
A show cause notice was issued to appellant on the ground that as per Section 68 of Finance Act, 1994 they were required to pay service tax on service rendered to BSNL which has not been remitted by them to treasury and they did not follow the relevant rules. Demand was confirmed. In appeal before the Commissioner (Appeals), the impugned order was upheld.
 
Hence, appellant filed further appeal before the Tribunal.
 
Appellant’s Contention:- Appellant contended that all tax dues and tax dues and interest thereon have been deposited into the treasury by the BSNL and hence there is no further payment due to the Government. Hence all the demands may be set aside.
 
Reasoning of Judgment:- At the stage of stay application hearing the investigation was ordered which showed that BSNL had deposited service tax. The Tribunal held that as per the submission of the Appellant in this the service tax liability and interest thereon has been discharged, though not by the service provider but by the person who received the service. So there are technical violations of the relevant laws. Since all duties have been remitted into the treasury as per the submissions of the appellant the related demands made in the impugned order would be waived. Further they held that invoking the provisions of Section 80 of the Finance Act, 1994 all penalties imposed in impugned order would also be waived.
 
However, the Tribunal clearly specified that this order cannot be precedent for the appellant not to comply with the relevant rules for future period. Further, if the interest as applicable is not paid the department can recover it from the appellant after giving him notice and opportunity to provide evidence, if any.  
 
Decision:- Appeal disposed off accordingly.

Comments

  • ram on 12 August, 2011 wrote:

    it is becoming increasingly difficult to get justice unless the tax payer approaches the tribunal / high court / supreme court.

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